Correlation Between Pinnacle Financial and New York

Can any of the company-specific risk be diversified away by investing in both Pinnacle Financial and New York at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pinnacle Financial and New York into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pinnacle Financial Partners and New York Community, you can compare the effects of market volatilities on Pinnacle Financial and New York and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Pinnacle Financial with a short position of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinnacle Financial and New York.

Diversification Opportunities for Pinnacle Financial and New York

0.12

Correlation Coefficient

Pinnacle Financial  New York

Average diversification

The 3 months correlation between Pinnacle and New is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Financial Partners and New York Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Community and Pinnacle Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Pinnacle Financial Partners are associated (or correlated) with New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Community has no effect on the direction of Pinnacle Financial i.e., Pinnacle Financial and New York go up and down completely randomly.

Pair Corralation between Pinnacle Financial and New York

Assuming the 90 days horizon Pinnacle Financial Partners is expected to generate 1.1 times more return on investment than New York. However, Pinnacle Financial is 1.1 times more volatile than New York Community. It trades about -0.02 of its potential returns per unit of risk. New York Community is currently generating about -0.24 per unit of risk. If you would invest  2,495  in Pinnacle Financial Partners on October 8, 2024 and sell it today you would lose (10.00) from holding Pinnacle Financial Partners or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.95%
Values	Daily Returns

Pinnacle Financial Partners  vs.  New York Community

Pinnacle Financial

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pinnacle Financial Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Pinnacle Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

New York Community

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days New York Community has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, New York is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pinnacle Financial and New York

The main advantage of trading using opposite Pinnacle Financial and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinnacle Financial position performs unexpectedly, New York can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in New York will offset losses from the drop in New York's long position.

The idea behind Pinnacle Financial Partners and New York Community pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.